Thursday, December 11, 2008

Gonna have to change the name of the Blog

A couple of months ago a reader sent me an email that I needed to change my Blog's name to the "American Energy & Credit Crisis".

Now even that name would be passe.

The financial collapse heard round the world has put off the energy crisis for a year or 2, may be even 3. A shrinking economy derails the need to expand energy production. IT DOES NOT DERAIL THE NEED TO EXPAND FOOD PRODUCTION.

IF the population expands, AND/OR the population wishes to consume more meat/Then the world needs to increase its supply of grains. Financial market conditions are giving farmers great incentive to plant less. The entire Federal Government is busy looking at the Big 3/problem of the day while the Wolf sneaks in the door.


Us or them.

Russia is on the verge of COLLAPSE - AGAIN. Well, as an American, it was better them than us. Oil was going to King either Russia or the U.S. and destroy the other, and in the long run Oil will probably wipe the floor with both countries. This round went to the U.S.

This has given the U.S. a unique opportunity, and has presented a significant challenge. The U.S. is the MOST LEVERAGED NATION in the world to Oil prices. While the price is down and supplies are plentiful, this is the moment to invest in electrified rail transportation, educate our population, build nuclear plants, wind and solar farms, enact new zoning regs, etc... to redefine our living arrangements.

Is it going to happen? NAFC.


"U.S. household wealth fell from July to September by the most on record as property values and stock prices tumbled, Federal Reserve Data Show."

This process is going to continue over the course of the next decade leaving the economic landscape of 2020 almost unrecognizable to folks in their 30's, 40's and 50's.

This is the time to invest in yourself - your small business or professional practice - and to be EXTREMELY frugal. Those of you that know me know I drive an 8 year old truck (my wife drives a 3 year old Ford Minivan with NO extras) but mostly I bike around town. I can afford to drive whatever I want, but I am as frugal as a "Scottsman that has been stripped of his charity". We have a religious belief against wearing jewelry, and I have not been in a clothing store in years (for me, socks and underwear come from Costco). I would rather drag my butt through 6 miles of broken glass than have a car loan, credit card debt, or a mortgage. I am not preaching. I am merely pointing out a system of values that will help you buy your life back from the world. I look at every "monthly payment" - cell phone, cable TV, etc... with a jaundiced eye of malevolence. I do spend a fortune on private school, tutors, and private lesons for my children, and will continue to do so with my last dime. Frugal as I am, I feel like a live like a King. I surf, train jiu-jitsu, bike ride, garden, etc... PLAYTIME... endlessly.  Most of my hobbies cost very little to indulge.

Read this excellent link. It is the first chapter of the book "The Millionaire Next Door". If you are already a Millionaire, good for you - now stay that way by being frugal. If you are not, this is as good a guide as any I have seen. The problem in the future is how you STORE your wealth.  Somehow I think financial assets are going to come up short for our purposes.  Your business will be an important store of value.

Whatever you do,  DO NOT listen to the talking heads on CNBC!!  These folks are deluding themselves and trying to delude you.  EVERYONE on Wall Street talks his book 24/7!!  Most would lie for a dime if the truth paid a dollar.  And people speaking for the government are in the business of trying to generate CONFIDENCE - not truth.  Ever hear the term "con man" (as in "confidence)?  

Opportunities abound, but you won't get tipped off by the folks on CNBC.

Good Luck!!

Mentatt (at) yahoo (d0t) com


bureaucrat said...

It is not the energy prices we should be so concerned about -- it is the numbers of barrels and natural gas therms produced that should be discussed, and it will be discussed more as time goes along. In the meantime, everyone hang on to your job and enjoy the deflation. It won't last forever.

Anonymous said...

Greg- is it likely that all the bailout dollars will find their way to a massive market ralley?

Anonymous said...

It looks to me like all these newly created dollars will cause what looks like a rally and positive economic stimulus. Then inflation will take hold. The new highs may not look so high if adjusted to present dollars. Considering the amount of debt hanging around, some inflation may not be too bad. I think the government wants it to keep people in their houses and to meet the obligations they can't hope to cover in today's dollars.


Coal Guy

Anonymous said...

TPTB are walking a thin line. If they get it right they may be able to devalue debt with inflation enough contain the present deflationary spiral of default. If they get it wrong the spiral will continue and we'll see another Great Depression. Or, if they get it wrong, we could see hyper-inflation as in the Weimar Republic. It's a thin line. Let's wish them luck, or Divine intervention or whatever it takes to get it right.


Coal Guy

Sean said...

Don't watch Faux Business News either. I saw a funny clip on youtube recently where a few of their talking heads were openly laughing at Schiff's audacious prediction (2 years ago) that the housing market would collapse. These same talking heads said financials (WaMu, Merrill, etc) were "incredible values." It's amazing that they still have their jobs with such a shitty track record.


I agree that it is a good time for the U.S. to start kicking its addiction to oil however I dont believe that an incentive exists with low oil prices. America's infrastructure is built under the assumption that oil will always be cheap and plentiful. This can be seen by how the majority of Americans live in the suburbs and commute, by driving, to their work. This is one of the reasons why the US lacks adequate public transportation, especially when compared to Europe.
I agree with your view on soft commodities, especially with the recent news from Argentina.

bureaucrat said...

I think once again we may be going over the edge a bit. Responsible use of credit got us thru the 1950s 1960s 1970s etc. with plenty of growth. The big prob is that people are not making enough anymore to pay off an acceptable credit card balance (China, exporting jobs, blame who you want). The jobs like I have don't exist anymore. $60,000+ a year with moderate benefits and retirement savings. If you can find that, smart use of credit is not a sin. What we had in the last 20 years was a mountain of cheap credit given to people who should never have qualified for it. It is now almost a national emergency because of the lending (and loss) of this damn credit. The awful, awful government people (like me) would have normally prevented this nonsense from occurring (Dodd & Frank are jerks). We have only ourselves to blame for allowing it to happen. In the meantime, I say, charge it! ;)